Amazing story: a 'no' to Spielberg

But after they submitted a final budget of $130 million for their 3-D animated movie "Tintin," based on the Belgian comic strip, to Universal Pictures, the studio balked. The decision has left the two powerful filmmakers scrambling to find another financial partner.

When even Spielberg and "The Lord of the Rings" director Jackson, who have made some of the biggest blockbusters in history, can't get their movie made, you know something is up in Hollywood. Universal's refusal to finance "Tintin" underscores how in today's tough economic climate, bottom-line concerns trump once-inviolable relationships between studios and talent.

Until now, however, filmmakers of Spielberg's and Jackson's stature were thought to be immune to the brass-knuckles tactics of the studios. Squeezed by a business trapped between rising costs and leveling revenues, the two filmmakers are Hollywood's latest -- and most prominent -- victims of cost containment.

Movie studios have long entered into financial arrangements with talent for reasons other than pure economic reward. Sometimes a deal is made for the prestige of associating with a famous actor or director; sometimes it is done in the belief that half a financial loaf from a proven hit maker is less risky than a whole one from an untested filmmaker; and still other times it happens simply to keep relations warm so the talent will want to work for the studio.

The particular problem for Universal with "Tintin" is that Spielberg's and Jackson's involvement comes with a huge price tag. The two filmmakers together would command such a large percentage of the movie's revenue as part of their compensation -- without putting up any of the capital themselves, as is typical in Hollywood -- that it takes a substantial slice of the profit off the table for the backers.

Studios in recent times have shunned some costly deals with filmmakers and stars. Fox decided not to make the comedy "Used Guys" in 2006 with Jim Carrey and Ben Stiller after concluding the deals with the actors outweighed the odds of making its money back. And many in Hollywood also remember how Paramount Pictures just barely broke even the same year on "Mission: Impossible III." Even though the movie grossed nearly $400 million worldwide, its star and producer Tom Cruise pocketed more than $80 million.

And "Tintin" is arguably a very risky project. It is based on the 1929-to-1976 book series written by the late Georges Remi, under the pen name Herge, about the global adventures of a young reporter and his dog, Snowy. The comics have a loyal following in Europe but are mostly obscure to U.S. audiences.

Paramount, which owns DreamWorks, where Spielberg has been developing "Tintin" for many years, had agreed to finance half the film but was hoping to have a financial partner in Universal. Paramount, a Viacom Inc. unit, has shouldered the vast majority of the more than $30 million spent on scripts, character design and initial animation and 3-D tests -- even before the movie had officially been given the green light for production. (Those costs are included in the $130-million budget.)

Spielberg has wanted to make "Tintin" since 1983, when he optioned the movie rights at his Universal-based production company, Amblin Entertainment. He has conceived the project as a trilogy, with the first film to be directed by him, the second by Jackson and no plans yet for the third.

Spielberg hoped that "Tintin" would be the next movie he would direct, with production to begin this month. The first two movies, using so-called motion-capture technology, were to be filmed back to back, similar to how Jackson made the "Lord of the Rings" trilogy.

But in a surprising move, when Spielberg and Jackson approached Universal, which has had a long-standing option to co-finance the picture, the studio decided that the deal made no financial sense. According to several people close to the project, "Tintin" would have to rake in $425 million worldwide in ticket sales before the studios could break even.

The reason: Spielberg and Jackson, who would also produce both movies, would together grab about 30% of the studio's total gross revenue from box-office, DVD, television and other sales. Under that scenario, the pair would walk away with more than $100 million before Universal and DreamWorks could make a profit.

To add embarrassment to injury, Universal's decision to pull out of "Tintin" thrusts Spielberg into a highly awkward situation. The director, along with his partner David Geffen, is getting ready to extricate himself from Paramount after a stormy 2 1/2 -year association.

As a result, Spielberg is having to go hat in hand to ask Paramount to finance all of "Tintin" at the same time he faces delicate negotiations regarding his and Geffen's split from the studio. Those talks, among other things, are likely to involve scores of projects that the director wants to take with him to his new home as well those he could produce at Paramount.

Universal, as it turns out, is also the leading contender to distribute DreamWorks' new movies once it breaks free from Paramount. But as solely a distributor, Universal would not have any investment in the movies and would have no money at risk.

In deciding not to back "Tintin," Universal may have been swayed by the spotty box-office track record for motion- or performance-capture movies. "Tintin" would be produced in digital 3-D animation using performance capture technology, in which actors wear body sensors that record their movement. That information is then fed into a computer and digitally manipulated.

Such motion-capture films as "The Polar Express," "Beowulf" and "Monster House" have performed considerably below the $425-million box-office gross benchmark that "Tintin" would need to reach to break even.

Late last month, Spielberg and Jackson showed a group of 10 Paramount executives, including Chairman Brad Grey and Vice Chairman Rob Moore, a 10-minute sample of what the movie would look like that was produced at Jackson's New Zealand visual effects company, Weta Digital.

Paramount executives are analyzing the economics of "Tintin" and are expected to decide shortly whether to bankroll the entire movie. If they do, Spielberg hopes to begin shooting next month.